Themes & Methods

Ecological Economics

Ecological Economics is an emergent school of economic thinking distinguished from the neoclassical model on two key points:

1. the laws of thermodynamics apply to economic processes

2. humans receive direct economic benefit from ecosystem services that

are not counted in any market.

The second point may be adopted by the mainstream, but the first is difficult for standard economics to absorb, for the laws of thermodynamics set limits to economic growth. Alone among disciplines that have any aspiration to scientific rigor, economics has remained unchanged by the thermodynamic revolution of the late nineteenth and early twentieth century.

THE LAWS OF THERMODYNAMICS

1. Matter and Energy can neither be created nor destroyed, only transformed.

2. With any use of energy in a thermodynamically closed system, some of the usefulness of the energy is irretrievably lost to us. Entropy—a measure of the amount of energy unavailable to do work—must always increase.

Measuring What Matters: The Genuine Progress Indicator

The Gross Domestic Product (GDP) measures the gross volume of monetary exchange within the

economy. That gross number doesn’t tell us what the money is spent on or whether the expenditures add to our economic wellbeing.

Defensive and remedial expenditures (like the cost of dealing with crime, or pollution) add to the total, when they properly should be viewed as costs, not benefits. GDP fails to account for economically valuable goods and services that come to us outside of markets, including the significant contribution to our wellbeing that is made by ecosystem services. It also adds volunteer work and unpaid domestic labor as contributions to our economic wellbeing. The Genuine Progress Indicator (GPI) accounts for these externalities in economic measurements and offers an alternative to the GDP.

More than a half-dozen states have either calculated their own GPI or its GPI was developed by an academic and/or non-profit organization. State governments are now exploring how to employ specific indicators and the GPI as a whole to assist in policy decisions and budget analyses.

Fossil Fuel Divestment

The following quoted from "Fossil Fuel Divestment: A Brief History" from The Guardian:

“is the removal of investment assets including stocks, bonds, and investment funds from companies involved in extracting fossil fuels, in an attempt to reduce climate change by tackling its ultimate causes.

Numerous groups advocate fossil fuel divestment, which in 2015 was reportedly the fastest growing divestment movement in history. Beginning on campuses in The United States in 2010 with students urging their administrations to turn investments in the fossil fuel industry into investments in clean energy and communities most impacted by climate change, the movement soon spread across the globe. By December 2018, a total of 1,000 institutions and over 58,000 individuals representing $8 trillion in assets worldwide had been divested from fossil fuels.[2][3][4]

A study by the Smith School of Enterprise and the Environment at the University of Oxford found that the stigmatisation of fossil fuel companies caused by divestment can “materially increase the uncertainty surrounding the future cash flows of fossil-fuel companies.” That, in turn, “can lead to a permanent compression in the trading multiples – e.g., the share price to earnings (P/E) ratio of a target company.

The study also says that: The outcome of the stigmatisation process poses the most far-reaching threat to fossil fuel companies. Any direct impacts pale in comparison.”

Resources

Daly, H. E., & Farley, J. (2003). Ecological Economics: Principles And Applications (1 edition). Washington: Island Press.

Zencey, E. (2013). Energy as Master Resource. In State of the World 2013: Is Sustainability Still Possible? (pp. 73–83). Washington, DC: Island Press/Center for Resource Economics. https://doi.org/10.5822/978-1-61091-458-1_7

Reno, J. O. (2016). Waste Away: Working and Living with a North American Landfill Introduction Pages 1-18

Barrett, G. W., & Odum, E. P. (2000). The Twenty-First Century: The World at Carrying Capacity. BioScience, 50(4), 363–368. https://doi.org/10.1641/0006-3568(2000)050[0363:TTFCTW]2.3.CO;2

“Energy Literacy,” pp. 3-24 from Butler, Lerch and Wuerthner, The Energy Reader and Naughton http://energy-reality.org/essays/

Jon Erickson, “Crash Course in Ecological Economics” https://www.youtube.com/watch?v=d05jEprJxtE

Hall, C. A. S., Balogh, S., & Murphy, D. J. R. (2009). What is the Minimum EROI that a Sustainable Society Must Have? Energies, 2(1), 25–47. https://doi.org/10.3390/en20100025

Costanza, R., de Groot, R., Braat, L., Kubiszewski, I., Fioramonti, L., Sutton, P., … Grasso, M. (2017). Twenty years of ecosystem services: How far have we come and how far do we still need to go? Ecosystem Services, 28, 1–16. https://doi.org/10.1016/j.ecoser.2017.09.008

Gómez-Baggethun, E., & Barton, D. N. (2013). Classifying and valuing ecosystem services for urban planning. Ecological Economics, 86, 235–245. https://doi.org/10.1016/j.ecolecon.2012.08.019

Jansson, Å. (2013). Reaching for a sustainable, resilient urban future using the lens of ecosystem services. Ecological Economics, 86, 285–291. https://doi.org/10.1016/j.ecolecon.2012.06.013

secondary literature

Ernstson, H., & Sörlin, S. (2013). Ecosystem services as technology of globalization: On articulating values in urban nature. Ecological Economics, 86, 274–284. https://doi.org/10.1016/j.ecolecon.2012.09.012

Earth Economics http://www.eartheconomics.org/publication-ecosystem-services-valuation

Nature’s Value In the Colorado River Basin

https://drive.google.com/file/d/1eljFLBM3gPppuzOg1H9zbIT7zkPAvxPz/view